Afrimat achieved a strong recovery in 1H26, driven by the cement and iron ore businesses. Key to the recovery was the improvements in reliability and efficiency of the old Lafarge operations, which boosted production and sales volumes. Iron ore benefitted from consistent demand from AMSA despite the closure of Newcastle, likely due to the favourable contract pricing.
Unfortunately, Nkomati was impacted by the ferrochrome smelter shutdown on 1 August 2025. While it only lost a month of sales, the outlook for the business is negative and it is likely to be temporarily shut down unless the furnaces resume operations. As a result, Nkomati could be loss-making in FY26 if Afrimat cannot increase the number and quantity of anthracite shipments. If Afrimat is unable to find new customers, the future of the anthracite business is in question.
The smelter and Newcastle shutdowns also impacted the Industrial Minerals segment. While a small part of the group, it is unlikely that the lost sales will be recovered and it will be a smaller operation going forward.
Despite the headwinds faced in the period, the outlook for the group is positive. Even with the closure of Newcastle, management expects AMSA’s current offtake to be maintained in 2H26. There is also potential that its export rail allocation will be increased to 2mtpa in FY27 (currently 870ktpa). Additionally, the cement business is operating at break-even and could deliver a small profit in H2. It is also expected to be supported by the aggregates and fly ash businesses, which continue to recover and increase sales volumes. The improved revenue and profitability, accompanied by increased cash flow and debt reduction in FY27, provide us with confidence in the turnaround of this business.